On 31 December, in order to reduce its debt of US$3.2 billion, WPX Energy sold the entirety of its oil and gas infrastructure in the San Juan Basin – its 220 mile pipeline gathering system.
It was purchased by a New York (USA) global infrastructure investment manager company, I Squared Capital, for US$309 million.
Through the deal, WPX shall receive US$285 million in cash. Additionally, receiving a "commitment estimated at US$24 million in capital designated" to expand the gathering system, as WPX continues its commitment to the San Juan Basin. This is due to the Gallup oil play, discovered in 2013.
The decision to sell came after the purchase of the US$2.3 billion Permain Basin-based RKI in August 2015. As a result, the purchase agreement saw WPX take on US$400 million of debt.
At present, WPX has a total debt of US$3.2 billion. This debt primarily consists of US$3 billion in notes, with the remaining amount in revolver borrowings.
Comments on the sale
WPX President and CEO, Rick Muncrief, stated that in addition to the November 2015 sale of the company's US$185 million gathering system in Williston (North Dakota, USA), the company’s main focus is on debt reduction.
Muncrief stated: “I’m pleased with the success of our asset sales. We exceeded our 2015 target and will continue to prioritise debt reduction in 2016.”
I Squared Capital Partner Adil Rahmathulla, commented: “We are excited about the opportunity to invest in the San Juan Basin, and look forward to collaborating with WPX in the build-out of the gathering system.”
Edited from various sources by Stephanie Roker
Read the article online at: https://www.worldpipelines.com/business-news/11012016/wpx-sells-san-juan-basin-pipeline-system/